Real estate Hong Kong Property: Has the worst passed for the retail landlords?

According to UBS Evidence Lab retail & recreation facilities foot traffic in HK has declined significantly. Latest data indicates foot traffic has already bottomed out in early August

11 Aug 2020

Foot traffic at HK retail & recreation facilities has a high correlation with the retail landlords' share price

Source: UBS Eviden Lab, Google LLC (> Access Datset)

This chart shows foot traffic at Hong Kong retail & recreation facilities has a high calibration with the retail landlords' share price.

Number of new COVID-19 confirmed cases in HK trending down

The retail landlords' share prices rebounded by 4% on average today, which we believe is mainly due to the trending-down in COVID-19 confirmed cases. According to the HK government, the latest number of new COVID-19 local confirmed cases has declined to 32 persons, down 78% from the peak level as of 30 July. The 7-day moving average figure has also continued to decline since early August. Although the social distancing and dining restrictions still remain in place, we believe the trending-down in COVID-19 confirmed cases could be a strong catalyst to support the recovery of retail facilities foot traffic, as well as retail landlords' share prices.

Retail foot traffic has already bottomed out in early August

According to UBS Evidence Lab, retail & recreation facilities foot traffic in HK has declined significantly since mid-July, given the acceleration of the COVID-19 third wave outbreak. However, the latest data indicates foot traffic has already bottomed out in early August. If the COVID-19 confirmed cases continue to decline, we believe retail foot traffic should further pick up and drive the local retail spending recovery, with reference to the period during Apr-Jun when the second wave of the virus outbreak was contained.

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